Recently, I wrote in Supermarket News that grocery stores have landed in a trap. It’s a trap of their own making, by having grocery rebranding messages focused on price and fresh food. Everyone uses those same messages and they are just definitions of a grocery store. You have low prices and fresh food.
Now comes news of a new competitor that actually responds quickly to change: Amazon.
The online retail giant announced that it will open 20 brick and mortar grocery stores over the next few years, with the stated goal of swarming the country with up to 2,000 eventually. That’s four times more than Walmart owns now.
Grocery stores such as Kroger, Albertson’s and others have reason to be worried. Walmart owns low price. The local chains own fresh (although all grocery stores should own it). And now Amazon will own new and exclusivity.
Amazon will have true grocery stores, where you push a cart (or a buggy, as we say in the South) and shop aisle by aisle. But it will also have a click and collect drive-up component in which shoppers shop online and pick up at the store.
Now, many groceries offer that, so that part won’t be all that different. Although, it should be noted, that Amazon’s brand gives it greater permission to do it.
Amazon is better at grocery rebranding.
No, the real Amazon advantage is that it will know its customers. It already has a handful of Amazon Fresh customers who pay $15 monthly fee. More importantly, it has millions of Amazon Prime customers, meaning that Amazon could make its grocery stores exclusive to those members.
There are two advantages to that approach. One, we humans believe that exclusivity means better quality. The clubs we can’t get into are the ones we want to enter the most. (Or, as Groucho Marx said, he wouldn’t want to be a member of any club that accepted him as a member.)
Secondly, Amazon has more data on its customers than probably just about any company in the country (maybe the world), with the possible exception of Google and Apple. That means Amazon can tailor its stores to its specific customers.
Grocery rebranding has been a wasteland for chains, both regionally and nationally. If there is more than one grocery store in your area (and that’s true for most Americans), you end up buying at the store that’s most convenient on the way home. Or you buy on price (Walmart). Or you have a tiered system in which you buy basic supplies at the cheapest store and produce & meats at a more high-end store, like Fresh Market.
Amazon entering the market, though, tells grocery stores that they better get serious about grocery rebranding or they are going to be looking from the outside at more successful efforts that respond to change.